Apple’s CEO Steve Jobs has for years stood adamant about the business model employed by the iTunes Store. It would remain strictly pay-to-own. Nothing would change that. It is what has proven most successful for the company - despite the emergence of numerous buffet-style options in the digital download marketplace. Why try to amend or rearrange something that has for several years worked quite well. Four-billion-plus songs sold so far? Mr Jobs has a pretty nice number to show any doubters of his “stick-with-it-ness.”
Yet we now see in a report delivered by the Financial Times only hours ago that Apple is presently “in discussions with the big music companies about a radical new business model that would give customers free access to its entire iTunes music library in exchange for paying a premium for its iPod and iPhone devices.”
Sure, Apple - and its chief executive especially - is a company that has been known to live for surprise and paradigm shifts and the like. But this news seems almost entirely antithetical to the way in which it has conducted itself in the digital media marketplace since the launch of the iPod earlier this century.
The only outstanding hint of this change in Apple’s strategy for the iTunes Store was the recent debut of the iTunes Move Rentals platform. With the new system, officially unveiled at the Macworld Conference & Expo in San Francisco, California, this past January, customers can now pay less for digital films than they would to buy them outright, albeit with a compromise of en eventual expiration of the downloaded movie(s). Still, even with the launch of movie rentals in mind, one cannot draw a very clear parallel with the music distribution side of the business. Music and movies are hardly synonymous. Also, it must be said that iTunes customers are still required to pay for movie downloads - whether purchased or rented. Free, subsidized music downloads is a concept that the Big Four must have at least some reservation about.
The FT explains Apple’s pursuit of blanket access for all music for iPod and iPhone customers as one that may be an attempt to preempt the emergence of a new market phenom in the form of Nokia, the Finnish mobile phone maker of global repute that “is understood to be offering almost $80 per handset to music industry partners,” a sum that would be apportioned “according to their share of the market.” The FT report goes on to reference statements made by unnamed executives purportedly “familiar with the negotiations” that Apple has thus far only made an offer of $20 per device.